The coming year look positive for balanced funds because of their unique portfolio composition. These funds would capture both the uptick in stocks as well as a likely rate cut by RBI in the coming months.

"The first half of 2017 looks challenging due to the temporary slowdown caused by demonetisation. Complexity is likely to go up further during the initial phase of GST implementation as well," says Vinit Sambre.

Midcap space has been haunted by valuation concerns for a while now. Several pundits have been predicting a meltdown in the space and asking investors to play it safe by betting on largecap mutual fund schemes.